– whether a Canadian mutual fund is a PFIC or not (noting that the IRS has not ruled that a Canadian mutual fund is a PFIC)

Of particular interest is:

The remaining of this article is written under the assumption that Canadian mutual funds (treated as trusts under Canadian law) are PFICs. It is however noteworthy to note that while Canadian mutual funds definitively meet the “passive” part of the PFIC definition (income test & asset test discussed below), it is debatable that it is a corporation.

The IRS says that it is a corporation if it is not a trust (Section 301.7701-2(a))1

A Canadian mutual fund might or might not be an investment trust as described in 26 CFR 301.7701-4 (c)(1) – in which case the mutual fund will not be a PFIC2.

The IRS has not ruled on whether Canadian mutual funds are trusts or corporations in the context of PFIC (and the ruling found was a private ruling letter, hence even in exact same context, would not set precedent to other taxpayers) – so no precedent exists.

In 2 instances, the IRS ruled that Canadian mutual funds were corporations:

The IRS has not issued a revenue ruling on the subject so in theory it would still be possible to roll the dice on that but the above should show strong indication that the IRS sees most Canadian mutual funds as corporations.

Also, if unsure if you have a PFIC, you can make a protective statement (described under “Protective statement regime” on page 5 of the instructions http://www.irs.gov/pub/irs-pdf/i8621.pdf – if it later turn out to be a PFIC, the protective statement allows the taxpayer to make a late election)